Report: Economy should avoid recession

A new economic report says the nation should avoid slipping into a recession this year, but the forecast could change for the worse, if the credit crisis expands.

This no-recession forecast comes from UCLA's quarterly Anderson forecast. It surprisingly runs counter to many other financial outlooks, which contend the economy is already shrinking due to record oil prices, job losses and the ongoing housing and credit crises.

This newest Anderson forecast agrees the U.S. economy is suffering negative growth and that the top contributor is the slumping housing market.

Still, this forecast insists so far, there will be no recession in 2008, even amidst the credit crisis that emerged last year due to declining home values and soaring mortgage defaults and foreclosures.

The poor housing market has in turn weakened consumer spending and hurt job creation. UCLA's Anderson Forecast does warn though that a recession could still happen if the credit crisis deepens and prevents big-ticket consumer spending, like on cars, and business purchases of equipment.

The no-recession forecast points out areas of slow-growth in 2008 with:

The U.S. unemployment rate expected to rise to 5.5% by the end of the year;

The U.S lost 63,000 payroll jobs last month - the second consecutive month of job losses;

Gross domestic product this year is expected to grow a mere 1.5% - the weakest showing in the past five years.

Economists generally look for at least two consecutive quarters of negative growth before they make a recession determination. Recession, or not - all forecasts seem to agree that the nation's housing slump will at least continue through this year.